I went to a talk last week, part of a series organised by the Smith School of Business. It was given by two people* who are looking for ways to encourage investment funds to put pressure on corporations to take action on climate change.
Both presenters are pretty serious, hard hitting people, and they have calculated that when climate change hits four degrees (which some scientists see as the median or average rise by 2100, and others see as the minimum rise by 2100) company valuations will fall by around 75%.
This is what ‘catastrophic’ climate change would look like in the business world, and they see it as a lever to encourage action now.
Valuations would fall 75% not because of market sentiment (as in the Wall Street Crash) but because of real, devastating climate events, disrupting business operations.
Imagine the weather events it would take to make Apple lose 75% of its value. Or Google. Or General Motors, Ford, Toyota, Coca Cola, Unilever, Tesco, Sainsbury. Or all of them together — which is what these people are predicting.
My view is that if all those companies lost 75% of their value then they would in effect be worth zero. Because there would be nothing left to buy. No smartphones. No cars. No cola. No chicken korma.
The problem is that by the time we notice the effects of climate change (by the time we REALLY notice) it is too late to do anything about it. By the time you see the bullet coming, or feel it on your skin, it is too late to dodge.
We need companies to take action on climate change now. If we haven’t decarbonised our economy by 2030 it will be too late. No remaining action would be enough.
So corporations will leap into action, yes? No. Because most (but not all) directors feel that their responsibility is for their company results over the next 12 months, not for something that might happen in 50 years time.
The challenge is to find ways to help them change their minds now. To dodge the climate bullet before it is too late.
The red/pink band shows some of the latest predictions
on temperature rise by 2100:
* The presenters were Howard Covington and Raj Thamotheram